ACQUISITIONS

2019 Acquisition Activity

During the three months ended March 31, 2019, the Company acquired 70% of a company in Europe and increased its ownership of an Asian company from 49% to 60% after receipt of previously pending regulatory approvals in Thailand. The two acquired entities, which manufacture flavor products, will be managed under the Frutarom segment. The total purchase price for the acquisitions was $46.3 million, excluding cash acquired and including $12.4 million of contingent consideration and deferred payments. A preliminary purchase price allocation has been performed giving rise to goodwill of approximately $55.4 million and intangible assets of $18.4 million. The purchase price allocation is expected to be completed within the measurement period.

Pro forma information has not been presented as the two acquired entities are not material.

Frutarom

On October 4, 2018, the Company completed its acquisition of 100% of the equity of Frutarom Industries Ltd. (“Frutarom”).

Purchase Price Allocation

The Company allocated the purchase consideration to the tangible net assets and identifiable intangible assets acquired based on estimated fair values at the acquisition date, and recorded the excess of consideration over the fair values of net assets acquired as goodwill. During the first quarter of 2019, the Company updated the purchase price allocation, principally to reflect updated values for certain entities' fixed assets.

The purchase price allocation is preliminary and subject to change. The Company is currently finalizing the valuation of fixed assets, goodwill and intangible assets (trade names, product formulas, customer relationships and favorable/unfavorable leases and the related estimated useful lives). Additionally, the Company is finalizing the projected combined future tax rate to be applied to the valuation of assets, which could impact the valuation of goodwill and intangible assets. The determination of the fair value of assets and liabilities, including those related to leases, will be finalized as soon as the valuation is completed which is expected to be during the third quarter of 2019.

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed (in thousands) as of October 4, 2018:



	As reported in the fourth quarter of 2018			Measurement period adjustments		As reported in the first quarter of 2019
Cash and cash equivalents	$	140,747				$	140,747
Other current assets	699,627					699,627
Identifiable intangible assets	2,690,000			(21,700	)	2,668,300
Other assets	353,710			43,200		396,910
Equity method investments	25,791					25,791
Current liabilities	(311,325		)			(311,325		)
Debt assumed	(77,037		)			(77,037		)
Other liabilities	(632,488		)	(12,221	)	(644,709		)
Redeemable noncontrolling interest	(97,510		)	(5,700	)	(103,210		)
Noncontrolling interest	(3,700		)			(3,700		)
Goodwill	4,243,079			(3,579	)	4,239,500
Total Purchase Consideration	$	7,030,894				$	7,030,894

The preliminary fair value purchase price allocation of the assets and liabilities acquired in the acquisition of Frutarom as reported in the fourth quarter of 2018 were updated during the quarter ended March 31, 2019 primarily due to: (i) a $21.7 million decrease in the fair value of identifiable intangible assets (principally customer relationships and arising from the updated valuations for certain entities' fixed assets), (ii) a $43.2 million increase to property, plant and equipment (related to certain Frutarom entities), included in Other assets in the accompanying table, (iii) a $1.5 million increase to the noncurrent portion of earn-outs and a $10.7 million increase to deferred income tax liabilities, (iv) a $5.7 million decrease to redeemable noncontrolling interest. The cumulative impact of the adjustment resulted in a $3.6 million decrease to goodwill.

The measurement period adjustments did not have a material impact on the Company's Statement of Comprehensive Income for the first quarter of 2019.

The preliminary amounts of the components of intangible assets with finite lives that have been recorded are as follows:



(IN THOUSANDS)	Estimated Amounts		Weighted-Average Useful Life
Product formula	$	290,000	10 to 12 years
Customer relationships	2,230,000		18 to 23 years
Trade names	140,000		23 to 26 years
Favorable/Unfavorable Leases, net	8,300		5 to 15 years
Total	$	2,668,300

Pro forma financial information

The following unaudited pro forma financial information presents the combined results of operations of IFF and Frutarom as if the acquisition had been completed as of the beginning of the prior fiscal year, or January 1, 2018. The unaudited pro forma financial information is presented for informational purposes and is not indicative of the results of operations that would have been achieved if the acquisition and related borrowings had taken place on January 1, 2018, nor are they indicative of future results. The unaudited pro forma financial information for the three months ended March 31, 2018 included the pre-acquisition results of Frutarom for that period.

The unaudited pro forma results for the three months ended March 31, 2018 were as follows:



(IN THOUSANDS)	Three Months Ended March 31, 2018
Unaudited pro forma net sales	$	1,315,733
Unaudited pro forma net income attributable to the Company	112,620

The unaudited pro forma results for all periods presented include adjustments made to account for certain costs and transactions that would have been incurred had the acquisition been completed as of January 1, 2018, including amortization charges for acquired intangibles assets, adjustments for acquisition transaction costs, adjustments for depreciation expense for property, plant, and equipment, and adjustments to interest expense. These adjustments are net of any applicable tax impact and were included to arrive at the pro forma results above.